Taiwan Mulls Letting Chinese Investors Take Stakes in LCD Makers

Taiwan is considering ending a ban on investors from mainland China buying stakes in the island’s flat-panel makers, as part of efforts to increase cross-strait investments.

The Industrial Development Bureau is studying the feasibility of Chinese investors and how much they may be allowed to buy, Woody Duh, director-general of the Taipei-based agency, said by phone today. Duh declined to give possible stake sizes.

Ending the ban would allow liquid-crystal-display makers such as AU Optronics Corp. and Chimei Innolux Corp. to attract Chinese investors as they expand in the mainland. AU Optronics on Dec. 17 won approval from Taiwan’s Ministry of Economic Affairs to build a $3 billion LCD plant in the eastern Chinese city of Kunshan.

“Having Chinese investors will help Taiwanese panel firms secure orders from their partners and be more competitive against South Korean rivals such as Samsung Electronics Co. and LG Display Co.,” Charles Hsu, an analyst at Taipei-based Fubon Securities Co., said by phone.

Attracting investors will also help local LCD makers fund capacity expansion and equipment upgrade, Hsu said. AU Optronics and Chimei Innolux may spend more than NT$150 billion ($5.1 billion) on capital expenditure this year, he said.

The Commercial Times on Feb. 14 reported the economic ministry proposed to Taiwan’s Cabinet that Chinese investors be allowed to buy as much 20 percent of local LCD companies, citing people it didn’t identify. Any strategic alliances with Chinese home-appliance companies such as TCL Corp., Haier Group Corp. or Sichuan Changhong Electric Co. will help local panel producers expand on the mainland, the Taipei-based newspaper said.

Economic Focus

Tensions between Taiwan and China eased after Taiwanese President Ma Ying-jeou abandoned his predecessor’s pro- independence stance and focused on economic issues. The LCD industry wasn’t included in the 100 sectors and services opened to Chinese investors in June 2009.

Taiwan’s Cabinet is reviewing a proposal from the Ministry of Economic Affairs to further ease restrictions on investments from mainland China, the Government Information Office said in an e-mailed statement on Feb. 14.

China, Taiwan’s largest export market, regards the independently governed island as part of its territory, threatening to attack if it declares formal independence. The two sides split more than 60 years ago after Mao Zedong’s communists took control of China, forcing the ruling Kuomintang to retreat to Taiwan.

To contact the reporters on this story: Janet Ong at jong3@bloomberg.net; Adela Lin in Taipei at alin95@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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